We’re well familiar with the real estate phishing scam of underquoting by agents to lure unwary and inevitably disappointed buyers to attend and beef up the numbers at auctions of places they could actually never afford.

Thankfully, because of legislation to outlaw the practise, it’s a diminishing, if not entirely disappeared, exercise.

But more common, and from the vendor corner, is the “tell ’em they’re dreaming” tendency of people thinking of selling their beloved homes to wildly overestimate the value of their holding.

It’s because “people are so houseproud” that, according to Woollahra agent Alexander Phillips of Phillips Pantzer Donnelley, “about 40 to 50 per cent of vendors commence their consultations by overpricing their property’s value”.

It’s especially common, he says, with vendors planning to downsize and not wanting something as big or as expensive as their current home. They might want to sell for $4 million and buy in for $2 million. They arrive at the selling price “because that’s what they say they need”.

The credibility gap occurs, says Phillips, “because they don’t know what is actually happening on the market. They are not educated vendors”.

SALE: 1 Cater Street, Coledale sold for $3.4million in May. Click the image to read the story.

But the buying public are invariably right on the money. He says “when 50-60 people come through a place and tell you otherwise about the value of your place, it’ll be an indication that you are overpriced. They’ll be blunt! They ask straight out how the sellers has arrived at the figure they have?”

And then they’ll walk away and find a realistically priced property that suddenly appears that much more attractive.

Peter Hickey, of Buxton Sandringham in bayside Melbourne, says “buyers look at all properties and they compare: ‘If they’re asking this for that’…and then they find a comparable property that will cost much less, we know which one will sell!”

The most outrageous overquote I’ve heard of recently – and it’s still on the market- is a $4.5 million price tag attached to a 20 acre (8093 square metre) Melbourne hinterland block of steep farmland being advertised apparently to mostly Chinese buyers as having potential for commercial development or subdivision. The (STCA) proviso might disguise for the unwary that in a rural conservation zone nothing of the kind can happen, which is why the current owners are offloading.

An agent working in the same area estimates the land is overpriced “by about $3 million – even if it did have a gold mine on it”.

“Even if it had a four bedroom house with a swimming pool and a ménage on it … it’s $2 million overpriced. But obviously, the selling agent has met with the vendor’s happy price,” the agent said.

Phillips says unscrupulous agents will quote high to get business “especially when stock on the market is low”.

If vendors refuse to be educated and listen to real market wisdom, both he and Hickey will waive the opportunity to take the property to market because, as Hickey says, “it’s a great waste of time and money, with time on the market being the biggest cost. And in the bayside, it’s about $10,000 just to start an auction campaign”.

“If a property is $200,000 to $300,000 overpriced, the market will let you know within a month because by the fourth week, no one will be coming to the opens. To get the best price, you have to market it correctly and you’ll have an idea of the best price (potential buyers will pay) by week four.”

Hickey says in his experience the over-expectant vendor is often the one who really doesn’t want to sell. “They might be dipping their toe in a testing the market” – albeit in an expensive temperature reading.